The commercial real estate (CRE) industry has been a slow adopter of technology. However, it’s clear that property teams today will struggle to effectively manage properties without technological help. In fact, 96% of CRE professionals will stay the course or increase their investment in commercial property software this year, according to a recent survey. But with an explosion in tech solutions for the industry also comes a need, now more than ever, for the chief technology officer in commercial real estate.
Why CRE needs the chief technology officer
You must first understand the problems to appreciate why the chief technology officer in commercial real estate is needed now more than ever before.
The main chief technology officer responsibilities for commercial real estate companies include:
- Modernize the tech stack
- Drive technology transformation to better connect the enterprise
- Ensure technology meets changing CRE landscape
- Balance cost versus returns
- Drive ROI with technology investments
- Integrate and centralize data from other apps
- Ensure systems and data are secure
Read on for four problems CRE property teams face when it comes to tech implementation and how a chief technology officer can help solve them.
Problem 1: An overcrowded proptech market
The CRE industry is littered with tech solutions promising to help property teams solve complex issues. In recent years, proptech investment has skyrocketed. According to research from Future Market Insights, the proptech market is expected to grow from $18.2 billion in 2022 to $86.5 billion in 2032.
With so many solutions joining the market, it can be difficult to know what exactly will help property teams meet their specific goals. Not to mention there can be a lot of overlap between solutions, so it’s important to ensure any tech that an organization chooses to invest in is absolutely necessary and can help lead to an ROI. Additionally, some solutions that come to market aren’t always created by people who truly understand the commercial real estate industry, which means they may not tackle the right issues. Some tech providers also may not put as much focus on continuous innovation, which could make property teams less competitive over time.
What the chief technology officer does: These are just a few things to consider when implementing new technology. Chief technology officer responsibilities include vetting and bringing innovative solutions to an organization. A chief technology officer will look for technology that supports company goals and provides a competitive advantage. The CTO will also test the technology before committing to implementation by setting up a pilot program or conducting a proof of concept to see how the tech performs in real-world scenarios. This helps to ensure the tech investments will lead to an ROI. Finally, the CTO will stay updated on the latest trends and innovations within the proptech market to make certain that an organization’s tech stack is set up for long-term success.
Problem 2: Fragmented tech stacks
Many commercial property teams continue to face fragmented tech stacks that don’t help them to reach their full potential for maximum efficiency and profitability. Oftentimes, asset managers and owners leave the tech decisions up to the property managers. The result could be creating a tech stack with disparate systems that don’t talk to one other or integrate to easily share information across teams. A fragmented tech stack is also difficult to scale as a portfolio grows.
What the chief technology officer does: Chief technology officer’s responsibilities include conducting a comprehensive tech audit to identify all software currently being used and where the gaps might be. From there, the CTO can develop a clear tech roadmap that outlines the organization’s long-term strategy. The focus can turn to streamlining the tech stack, making decisions to retire redundant systems, or consolidating to a single platform. The key here is ensuring that all systems integrate with one another and work together seamlessly so that information can flow freely across teams and the organization.
Problem 3: Risks from ‘Shadow IT’
However, as people come and go within an organization (which is happening more and more amid historic turnover and labor shortage), team members may implement tech to solve small issues here and there. That means many team members could be using different pieces of tech that they’ve implemented on their own. This is often how Shadow IT happens at a company.
Shadow IT is any tech an employee uses without official approval. Unfortunately, Shadow IT could put a company at risk for compliance issues or data breaches. Shadow IT can also leave organizations susceptible to data loss. When team members store information in their personal accounts, for instance, that data isn’t accessible by others in the company. If the employee leaves, that data could be gone forever. And you can’t make the best business decisions without access to all key data.
What the chief technology officer does: The CTO will work to understand the reasons behind Shadow IT at an organization to develop a comprehensive tech strategy that addresses all the needs of the team. Shadow IT often happens when team members feel as if they aren’t getting the support they need from their tech stack. The CTO will focus on improving communication and collaboration with teams to ensure tech is helping employees meet their goals. Additionally, the CTO will work to implement security measures to ensure the organization isn’t vulnerable to any data breaches or data loss.
Problem 4: Uncertainty about ROI
Ideally, any money spent will lead to a clear return on investment. With tech investments, that ROI isn’t always as clear cut – especially if there is no process in place to monitor and measure results. And while some solutions may look good on paper, property teams will need to ensure their tech is making buildings and property teams more efficient. There’s nothing worse than being sold a solution that overpromises and underdelivers.
What the chief technology officer does: The CTO is the champion of ROI. This person will be tasked with working with teams to define clear goals before investing in any tech solutions. A chief technology officer will also conduct a cost-benefit analysis to evaluate the potential ROI of the solution, including costs from implementation, training, and maintenance. The CTO will weigh those costs against the expected benefits, such as increased efficiency, productivity, and revenue. Finally, the chief technology officer will measure results by monitoring key performance indicators (KPIs) to track progress. Key chief technology officer responsibilities also include reporting on those KPIs to key stakeholders and executives on the success of the investment.
Resources for the chief technology officer in commercial real estate
The role of the CTO in CRE is certainly exciting – and much needed, especially as the industry continues to evolve. Here’s a roundup of key resources to help commercial technology officers and property teams plan their tech investment strategies this year and beyond.
